US Economy Shows Surprising Strength in June
The United States economy demonstrated unexpected resilience in June, with key economic indicators surpassing forecasts. Retail Sales Advanced (M/M) for June jumped 0.6%, significantly outperforming the estimated 0.1% increase and marking a strong rebound from the previous month's -0.9% decline. This robust growth in consumer spending suggests a healthy demand environment.
Further bolstering the economic outlook, the US labor market continued to show strength. Initial Jobless Claims for the week ending July 12th came in at 221,000, lower than both the estimated 233,000 and the previous week's 227,000. This indicates persistent tightness in the job market, contributing to overall economic stability.
The manufacturing sector also showed a significant turnaround, as the US Philadelphia Fed Business Outlook for July soared to 15.9. This figure dramatically exceeded the consensus estimate of -1.0 and marked a substantial improvement from the prior reading of -4.0, pointing to renewed expansion in regional factory activity. Meanwhile, the US Export Price Index (M/M) for June rose by 0.5%, exceeding expectations, while the Import Price Index (M/M) saw a modest 0.1% increase.
Market Futures React to Data, Corporate Deals Unfold
Following the release of the stronger-than-expected economic data, U.S. stock index futures saw slight gains. S&P 500 E-Minis were up 0.04% and NASDAQ 100 E-Minis rose 0.15%, though Dow E-Minis registered a slight decline of 0.11%, indicating a mixed but generally positive market sentiment.
In significant corporate developments, Uber (UBER) announced a $300 million investment in electric vehicle manufacturer Lucid (LCID) as part of a strategic partnership to develop and deploy robotaxis. This collaboration signals a growing push into autonomous ride-hailing services. Separately, shares of high fructose syrup maker ADM (ADM) experienced a sharp decline after an announcement that Coca-Cola will switch to real cane sugar, impacting demand for ADM's products.
Canada's Trade Deficit Narrows; Nvidia Chips for China
Canada's international merchandise trade deficit significantly narrowed in June, reaching -$2.79 billion. This marks a substantial improvement from the revised -$9.46 billion deficit recorded in the previous month, suggesting a healthier balance in the nation's trade flows.
In the technology sector, Chinese technology companies and data center operators are reportedly preparing for a major influx of Nvidia’s (NVDA) H20 AI chips. This comes amidst an anticipated resumption of sales for the China-specific, high-performance chip, designed to comply with U.S. export restrictions. This development could provide a boost to the AI infrastructure in China.
Political and Central Bank Discussions
Discussions around potential Federal Reserve leadership continue, with Kevin Warsh, a potential Fed Chair pick, stating that the economy is at a "transformational moment" and advocating for a new 'Treasury-Fed Accord' akin to that of 1951. Warsh emphasized that "continuity" at the Fed is the "last thing we need." Meanwhile, in the UK, Keir Starmer announced plans to lower the voting age to 16 for all British elections. On the trade front, White House Trade Counsellor Navarro highlighted non-tariff barriers as a major challenge for the EU to resolve, also labeling the EU VAT tax as a subsidy.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.